One of my readers, a commission salesman, sent me a question the other day that I've been asked several times:

What percentage is the industry standard when it comes to negotiating sales commissions?

I'll share with you my response to him, and I hope it gives you some guidance as to negotiate compensation.

Your sales commission is a truly negotiable item and just as there are
no "standard" contracts, though every stationery store
sells documents that have that header, there are no
hard and fast rules regarding straight commission compensation.

I have seen 20% a great deal, but this will vary based
on a lot of factors:

How well known is the product?

What is the profit margin?

How long does it take to make a sale?

How difficult is this item to sell?

Here's a commission plan that really worked for me as a salesman, and you might want to negotiate the same sort of scheme.

During graduate school I sold ball point pens, two gross at a shot over the phone.

I "bought" the pens from management at something like
16 cents and sold them for 33 cents. This was a "keep
all over" commission plan, so I could choose to sell
pens at any price I wished. My upward limitation was
the 49 cents engraving at the top of each pen's
barrel.

I made great money this way, and the house got its
price, too. It was a win-win commission arrangement.

But with any plan you need to be careful, especially if you're selling for someone else. Make sure
SOMEONE ON STAFF NOW is making great money and ask that
person to confide in you, telling you: (1)
Management pays on time, and (2) Management has no
history of cutting back on the commission structure.

Also, make sure that management does not keep more
than a 10% "reserve" against charge-backs, if they
compute them, at all. Also, it needs to be explicitly agreed that funds that accumulate in a
charge-back reserve are yours, released to you at a
definite point in time, i.e. 60 days after sale or
upon receipt of payment from the client.

Hope this helps.

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